Out on a wing

HR management is the key in the airline business

Human resource issues in merger and acquisition are some of the toughest challenges for corporations. This is a lesson the management of Tata- and Singapore Airline-owned airline Vistara has absorbed the hard way. Over the past few days, the airline has been mired in chaos, cancelling almost a tenth of its 350-odd daily flights after pilots reportedly called in sick to express their dissatisfaction with new contracts ahead of a merger with formerly state-owned Air India.

This is a predicament with which Air India’s former owners would have been familiar, not least during the merger of Air India, the flag carrier, with Indian Airlines, the domestic carrier, in 2007. That crisis, which festered for months, should have raised the red flag for the current exercise. If anything, the Vistara crisis presents a good example of how not to manage employee grievances.
 

Signs of the impending crisis were visible in late February-early March, when some pilots reported a sickout. At the heart of the problem are the restructured pay packages for Vistara pilots to bring them in line with those of Air India. The new salary structure, which pilots were required to accept by March 15, would have resulted in significant pay reductions for first officers, giving them a minimum guaranteed flying of 40 hours after the integration against 70 hours at present.

For captains and senior captains, the reduction would be between 52 and 60 hours, respectively. Two Air India unions associated with Vistara pilots have reportedly written to the Tata Group chairman, expressing their concerns. To be sure, this reduction came with a hefty one-time compensation payout but the grievances over new salary packages morphed with other grievances. One is the indefinite postponement by the Directorate General of Civil Aviation (DGCA) of the improved Flight Duty Time Limitation Rules (FDTL) from the original deadline of June 1 under pressure from domestic airlines.

The new FDTL, passed in response to pilot complaints across the industry, mandates longer rest periods, fewer night landings, requiring airlines to hire more pilots. This apart, pilots were also concerned about seniority within the merged structure. Several spoke of fears of losing seniority within the merged structure irrespective of flying experience. The issue of seniority is additionally important for pilots because it determines their ability to choose their base and aircraft (whether wide-bodied or narrow-bodied).
 

Airlines the world over understand that pilots wield a uniquely strong bargaining power within an organisation. Consequential changes in salary structures, seniority, and rostering, therefore, demand energetic management engagement to ensure a smooth transition process. Vistara, however, held a town hall with the pilots after the crisis manifested itself in the marketplace with large numbers of cancellations, delays, and inconvenienced customers. No doubt the experience with the merger of Vistara-Air India, a full-service carrier, will offer lessons for the impending merger of Air India Express with AIX Connect (formerly AirAsia), the Tata group’s low-cost offering.

The significant commitment by the group in the airline business demands another order of skilful people management at a time when the post-Covid aviation market is growing rapidly. Domestic air traffic alone is expected to grow 8 per cent in FY25, after similar growth in FY24. With pilot-training schools unable to keep pace with demand and quality, all airlines can be expected to be in poaching mode, raising the prospect of mass sick leave becoming a mass exodus.